Over the last five years, the UK tour operators market declined as consumer confidence waivered along with worsening economic conditions. The exchange rate also did not help the situation with a significant number of UK tourists limiting their expenditure on holidays, choosing cheaper alternatives.
The industry reported a decline in revenues over the last five years with reduced profit margins and the changing consumer behaviour combined with these factors has seen companies forced to restructure in an increasingly competitive market place.
The decline in the tourist revenues over recent years has seen a re-structuring of the industry especially as consumer preferences over how they book their holiday has changed significantly. An increasing proportion of consumers book holidays independently or online using companies such as Expedia, Opodo and lastminute.com. The move towards online and independent booking has squeezed profit margins further with tour operators forced to adapt and reduce prices.
Over the period 2008 to 2013, the market reduced by an average annual rate of 4.0% to total only £9.2 billion in 2013. The UK tour operator market is set to recover slightly over the next few years to total £9.6 billion by the start of 2019 as the industry records an increase of 0.8% CAGR over the period.
The companies operating in the UK tour operators market have seen profit margins decline from 5.0% to only 3.2% during the period 2008 to 2013. Further competition in the UK market is set to see companies forced to adapt structurally and in some cases the market will see further consolidation as the smaller players are unable to compete in a sector with such tight margins.
For more information on the UK tour operator market, see the latest research: UK Tour Operator Market
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